Futures Trading 24 Rules

1. Capital Usage: Divide your capital into 10 parts, with the risk taken in each trade not exceeding 1/10 of the principal. In other words, manage your funds by limiting your positions, ensuring that the risk taken in each trade does not exceed 1/10 of your capital. For example, with 10,000 yuan, the stop-loss for each trade should be 1,000. It is recommended that beginners divide their capital into even smaller parts.
2. Set stop loss when placing an order: Set a stop loss immediately after opening a position to protect your trade, rather than thinking about where to set the stop loss after opening the position.
3. Don't overtrade: This goes against your capital management principles. If you trade 10 times in a day, with a stop loss of 1/10 each time, you will lose your principal. Be patient and wait for the best trades.
4. Don't let floating profits turn into floating losses: Once there is a floating profit of more than 3%, set a protective stop-loss near the opening price, ensuring that the principal is never lost. You can try to move the stop-loss; gaining longer in the market is more important than making immediate profits. First and foremost, ensure that you do not lose, and then strive to earn.
5. Don't go against the trend: If you're not sure where the trend is, then don't trade.
6. If in doubt, stay out and observe: When you cannot comprehend the market situation, it’s best to step back and not trade.
7. Actively traded stocks: Only engage with stocks that have good liquidity, and steer clear of those with poor liquidity, as poorly liquid assets often do not align well with technical analysis.
8. Diversify Risk: Trade multiple stocks instead of going all in.
9. Don't just use limit orders: Be flexible and don't rely solely on limit orders. You might consider entering the market with market orders. Sometimes the market moves very quickly, and you won't have time to enter with a limit order. If you need to stop loss, a placed price may not get executed; when the market is moving fast, you should consider using a market order for a quick exit to stop loss.
10. Without sufficient reason, do not exit arbitrarily: Many people start to panic when they have a certain profit after opening a position, while some are reluctant to cut losses even after incurring losses. A little profit makes them feel that it is better to settle than to risk further, but the price is moving in the direction you want. At this point, you miss out on a significant profit, so you need to be patient. If you are worried about losing profit quickly, you can set a trailing stop.
11. Accumulate Surplus: If the trading goes smoothly, you can transfer some profits to a reserve account for emergencies. Do not reinvest all the money earned back into the market to snowball.
12. Don't buy stocks just for the dividends: Don't buy a particular stock just because of the dividends, nor should you buy a specific cryptocurrency just because of an airdrop or staking.
13. Never Average Down: This may be the biggest mistake traders can make, which is adding to a losing position, leading most people to lose everything. Some very bad statements in the market tell you that a bear market means buy, buy, buy.
14. Be patient when entering and exiting: do not rush in hastily, and do not lack patience when exiting. When approaching your take-profit level, do not exit quickly with a market order due to impatience.
15. Never take small profits and incur big losses: Don't run away after making a little profit, and don't hold onto a position and be unwilling to cut losses, which can lead to significant losses.
16. Once a stop loss is set, it cannot be casually canceled.
17. Do not frequently enter and exit the market.
18. The more willing you are to go long, the more willing you should be to go short. Keep your trading balanced and in line with the trend; this is the way to make money. In a bull market, you should be willing to go long, and in a bear market, you should also go short at high points.
19. Don’t buy just because the price looks low, and don’t short sell just because the price looks too high. A stock priced at 100 yuan may seem high, but when it drops to 1 yuan, you might decide to buy, not realizing it could continue to fall.
20. Pay attention to the timing of pyramid scaling. Wait until the stock price becomes active and breaks through resistance levels before adding to long positions, and wait until the stock price breaks below support levels before adding to short positions. A pyramid involves having a relatively large position when opening, with subsequent scaling being smaller.
21. Go long on small-cap stocks and short on large-cap stocks. In a bull market, small-cap stocks have a greater probability of doubling. If you short them, it will result in a very high price when you buy them back later. Selling large-cap stocks and buying back to cover your position is simpler.
22. If your position is wrong, don't hedge. If you go long on a particular stock and it starts to drop, don't open a short hedge; you should cut your losses and exit, waiting for the next opportunity. Seeing the stock price drop after going long doesn't mean you were wrong; opening a short hedge doesn't mean you were right.
23. Never change your trading plan arbitrarily without a good enough reason. To execute a trade, there must be sufficient justification, and it should be carried out according to the plan. Do not exit the trade casually before a trend reversal. Do not panic due to losses and deny your original trading plan; instead, analyze the market first, then formulate a plan and execute it.
24. Do not increase your position size just because you have made a few profits. If you originally traded 100 shares successfully, when you increase to 10 times the original position, a single misjudgment could result in losing the profits from 10 trades or even more.